Digital wallets are a relatively new kind of electronic application that can be used to store funds and make payments for good in stores or online over the internet. A bank account or credit card can be used to link to the wallet to fund payments, reducing the need to carry cash or credit cards around with you. Moreover, in today’s digital world, mobile wallets are becoming the payment method of the future.
Digital wallets are more than payment apps
While they are great for making payments for purchases using your mobile phone, a digital wallet is much more than just a way to make fast and convenient payments. Digital wallets can store other information, such as driving license details, health cards, loyalty cards, and many other identification documents. These credentials can be passed to the merchant via a terminal that is able to use near field communication (NFC) technology. More and more, these digital wallets are being used to authenticate the identification of the holder. One potential application for this would be to use the digital wallet to validate the age of someone who is attempting to buy alcohol. And in Japan, they are used for many essential ID documents, and have become known as “wallet mobiles”.
Two types of digital wallets exist
Digital wallets contain two major components; one for software and one for information. The software component provides the encryption and security of the information required for each transaction. A normal digital wallet is client-based, and most are fully compatible with almost every retail system and commercial website. These are the digital wallets that are used with mobile devices as apps on the device. A server –based digital wallet is created by a specific organization and maintained by them, in your name, much like an account with a home-shopping group in previous decades. The server-based wallet contains all the information the company needs, such as name, shipping address, billing address, payment details, etc.
More people are using digital wallets
Digital wallets have enabled the use of digital transactions in retail stores, instead of just online transactions, and are spreading exponentially around the globe. Digital wallets have become a major option for payments throughout Asia as well, with around 20 percent of consumers now using mobile phones as wallets regularly. In a recent mobile shopping survey by MasterCard, it showed that, from 8,500 adults across fourteen separate national markets, 45 percent of the users were in China, 36 percent were in India, and 23 percent in Singapore. In total, it shows that 48 percent of users across all 14 regions were making purchases using smartphones and that Indian consumers are leading the revolution with around 76 percent using smartphones for purchases.
Online payment for goods and services
To make a payment online using a server-based digital wallet is easy, as is the setup process for it. Once the user in online they just need to fill in the data on their profile, completing all the relevant information. Once it is set up, the wallet software has the ability to make an automatic payment at the checkout page of the website without the need for the consumer to input their payment information again. Since all their information has already been stored in the original form, when they check out the same information is auto-filled in the form and just requires a password for authorization.
Using digital wallets online
When you buy something online using your digital wallet, consumers are not required to enter all the information again, as it is permanently stored in the wallet. The information is encrypted when being used, and protects both user and merchant from fraud.
Digital wallets are free to obtain, and there are many to choose from. Consumers can either sign up for a digital wallet from the provider’s site or sign up for one of their choices when they reach the payment options page of a website. There they will complete all the required information, as well as username and password for future uses. However, while server-based wallets are free for consumers, they are not free for merchants. Vendors charge for their use, and some arrange the payment as a percentage of the transaction cost rather than a flat fee.
Advantages of digital wallets
As well as the ability to make the transaction more secure, digital wallets make purchases much easier and more convenient than ever before. They combine the ability to make simple purchases online or at retail stores and make the entire customer experience better.
Related articles published in Mobile payment :
- The impact of contactless EMV technology in South America
- Micropayment: A business model that can be viable if structured properly
- Cloud-based mobile payments are transforming your devices into e-wallets
- Trending mobile payments in South America